Australian Consumer Primer for 23 June 2026 – Metcash downgrade to Neutral, Woolworths and Coles, Endeavour

Research evidence excerpt

Australian Consumer Primer for 23 June 2026 – Metcash downgrade to Neutral, Woolworths and Coles, Endeavour

J P M O R G A N Asia Pacific Equity Research

23 June 2026

Stocktake

Australian Consumer Primer for 23 June 2026 –

Metcash downgrade to Neutral, Woolworths and Coles,

Endeavour

ACKey themes we are exploring today: AustralianBryan RaymondConsumer Sector

(61-2) 9003-6750

• Metcash downgraded to neutral as it faces another year of earnings bryan.raymond@jpmorgan.com

declines in FY27e. Metcash’s FY26 result was pre-released, with a mixed Christina Kim

(61-2) 9003-7082

trading update, but the focus was on a number of earnings headwinds in FY27E christina.kim@jpmorgan.com

(D&A, interest costs, corporate costs, tobacco stock profit) that more than J.P. Morgan Securities Australia Limited

offset the unwind of ~$12.4m of one-off strategy and integration costs taken

above the line. We downgrade our EPS forecasts by 10.3% in FY27 and FY28,

reflecting the above headwinds and a challenging cyclical backdrop.

Bloomberg consensus downgrades were less severe (-6.1% in FY27e, -5.4%

in FY28e) but still meaningfully larger than the result day share price move

(-1.9% vs. ASX200 -0.1%). We stand below consensus in both years (-2.3% in

FY27e and -5.7% in FY28e). We downgrade to Neutral from Overweight, as

our price target is reduced by 5.7%, to $3.30 from $3.50. At a 13.2x FY27E

PER, Metcash remains at a large discount to food, liquor and hardware retail

peers and the broad industrials (19.9x one-year forward PER) due to the

uncertain earnings outlook. We now expect earnings to decline once again in

FY27 (EBIT: -0.6% YoY; NPAT: -3.3% YoY), with the capital-intensive retail

supermarket strategy critical for medium-term growth, albeit not yet in our

forecasts. See our full report here.